The federal government accused one of the nation’s largest landlords with running a “Ponzi scheme-like” effort using cash from small investors and with misleading banks to obtain bigger loans by using fake loan documents.
The Securities and Exchange Commission filed civil charges against Robert C. Morgan, who amassed an empire of 140 properties and more than 34,000 units across 14 states, according to the website of his firm, Morgan Management. The Justice Department also filed criminal charges accusing Mr. Morgan of conspiracy to commit bank and wire fraud.
The SEC said Morgan raised $110 million from more than 200 mostly small investors beginning in 2013, promising a return of 11%. Morgan used most of the cash as a “fraudulent slush fund” to pay previous investors, the SEC said. In one instance, the SEC said cash was used to pay off an $11 million loan that Morgan allegedly obtained by falsifying financial information on a property in Pennsylvania.
Morgan couldn’t be reached for comment. He has previously denied any wrongdoing.
An expanded version of this report appears on WSJ.com.
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